Correlation Between CompuGroup Medical and East Japan
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and East Japan at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CompuGroup Medical and East Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompuGroup Medical SE and East Japan Railway, you can compare the effects of market volatilities on CompuGroup Medical and East Japan and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CompuGroup Medical with a short position of East Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and East Japan.
Diversification Opportunities for CompuGroup Medical and East Japan
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CompuGroup and East is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and East Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Japan Railway and CompuGroup Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CompuGroup Medical SE are associated (or correlated) with East Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Japan Railway has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and East Japan go up and down completely randomly.
Pair Corralation between CompuGroup Medical and East Japan
Assuming the 90 days trading horizon CompuGroup Medical SE is expected to generate 0.7 times more return on investment than East Japan. However, CompuGroup Medical SE is 1.42 times less risky than East Japan. It trades about 0.29 of its potential returns per unit of risk. East Japan Railway is currently generating about 0.04 per unit of risk. If you would invest 2,186 in CompuGroup Medical SE on November 3, 2024 and sell it today you would earn a total of 124.00 from holding CompuGroup Medical SE or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompuGroup Medical SE vs. East Japan Railway
Performance |
| Timeline |
| CompuGroup Medical |
| East Japan Railway |
CompuGroup Medical and East Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and East Japan
The main advantage of trading using opposite CompuGroup Medical and East Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, East Japan can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in East Japan will offset losses from the drop in East Japan's long position.| CompuGroup Medical vs. Tower One Wireless | CompuGroup Medical vs. Spirent Communications plc | CompuGroup Medical vs. SILVER BULLET DATA | CompuGroup Medical vs. Teradata Corp |
| East Japan vs. Coffee Holding Co | East Japan vs. Transport International Holdings | East Japan vs. GOLD ROAD RES | East Japan vs. Air Transport Services |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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